HIGH COURT OF RAJASTHAN
Commissioner of Income-tax
v.
S.C. Sethi
RAJESH BALIA AND R.P. VYAS, JJ.
D.B.I.T. APPEAL NO. 78 OF 2005
March 10, 2006
Section 143(3) of the Income-tax Act, 1961 - Assessment - Additions to
income - Assessment year 1993-94 - On basis of some entry in loose papers
seized from residence of one A, additions were made in income of assessee as
income from undisclosed source - On appeal, Commissioner (Appeals) noticed that
apart from some loose papers, there was no other incriminating material before
Assessing Officer and none of entries in seized documents indicated that amount
was received by assessee - He further observed that assessment suffered from
procedural errors inasmuch as assessee was not offered an opportunity to
cross-examination A - Thus,
Commissioner (Appeals) set aside assessment order - On remand, Assessing
Officer, without seeking presence of A, reiterated his earlier assessment
order - Whether in absence of opportunity of cross-examination of A from
whose possession loose papers were recovered more so when said papers by itself
did not indicate receipt of alleged undisclosed income by assessee, assessment
order could not be sustained and was liable to be set aside - Held, yes
A survey was conducted in the premises of a company. In the course of search, certain documents were seized from the residence of one A, who was one of the senior managers (Accounts) of the company. On the basis of some entry in loose papers seized from A, additions were made in the income of the assessee as income from undisclosed source by referring it to the emoluments received from the employer over and above the one which were admitted to have been received by him. On appeal, the Commissioner (Appeals) observed that apart from the said loose papers, no other incriminating material was before the Assessing Officer and none of the entries in the seized documents, relied on by the Assessing Officer, indicated that the amount was received by the assessee and, therefore, the observation of the Assessing Officer that it indicated the receipt by the assessee was factually incorrect. It was further noticed by the Commissioner (Appeals) that since the assessee had demanded cross-examination of A before loose papers seized from his residence could be used against the assessee, but such opportunity was not offered to the assessee and, therefore, the assessment suffered from procedural errors. Thus, the Commissioner (Appeals) set aside the assessment order and directed the Assessing Officer to complete the assessment de nova. Accordingly, the Assessing Officer again issued notices to A though at the same address wherefrom the notices earlier addressed were returned unserved and without seeking his presence, fell back on his earlier assessment reiterating the same addition for the same reason as prevailed with the Assessing Officer in the earlier assessment order, back on his earlier assessment order. On appeal, the Commissioner (Appeals) deleted the addition, on ground that the Assessing Officer had still not obtained attendance of the said A for being cross-examined by the assessee. On revenues appeal, the Tribunal upheld the order of the Commissioner (Appeals).
On appeal under section 260A
The findings recorded by the Tribunal were finding of fact affirming the
earlier finding of fact recorded by the Commissioner (Appeals). Apparently,
when the loose papers by itself did not indicate receipt of the alleged
undisclosed income by the assessee and peripheral reliance on the document was
not earlier countenanced in absence of opportunity of cross-examination of the
person from whose possession the loose papers were
recovered. The fact that the Assessing Officer had not made any efforts to
serve the said A and secure his presence by invoking powers under the Act for
securing presence of any witness also went to show that the Assessing Officer
had not really made efforts to give effect to the directions of the
Commissioner (Appeals) for making available opportunity of cross-examining A
by the assessee. [
Further, the affidavit of the corporate
vice-president about total emoluments flowing from the employer to the assessee
remained uncontroverted and could not have been ignored. [
Therefore, the findings recorded by the
Tribunal being findings of fact did not give rise to the question of law. [
Moreover, another fact which was also not in dispute that for the
subsequent year 1994-95 on the very same facts, the assessment order had been
set aside by the Commissioner (Appeals) and affirmed by the Tribunal and such
deletion of the very same income had not been subjected to appeal and had been
accepted by the Department. [
In the result, the appeal was to be dismissed.